Blink Charging Co. (BLNK) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to your Blink Charging Co. Second Quarter 2021 Earnings Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to Jennifer Belodeau of IMS Investor Relations. Ma'am, the floor is yours.

Thank you. Good afternoon, everyone, and welcome to Blink Charging's Second Quarter 2021 Investor Call. On the call today, we have Michael Farkas, Founder and CEO; Brendan Jones, President; and Michael Rama, Chief Financial Officer. I would like to take a minute to read the safe harbor statement. This conference call contains forward-looking statements as defined within Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements and terms such as anticipate, expect, intend, may, will, should or other comparable terms involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Those statements include statements regarding the intent, belief or current expectations of Blink and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties including those described in Blink's periodic reports filed with the SEC and that actual results may differ materially from those contemplated by such forward-looking statements. Except as required by federal securities laws, Blink undertakes no obligation to update or revise forward-looking statements to reflect changed conditions. I will now turn the call over to Michael Farkas, CEO of Blink Charging. Go ahead, Michael.

Good afternoon, everyone. Thank you for joining us. This was a very exciting quarter for Blink as we made considerable progress with our owner-operator strategy, we expanded internationally, we added some of the best in the industry to our team and continue to position ourselves as a leader and innovator in the EV industry. Second quarter revenue grew 177% compared to the second quarter of 2020 as we continue to aggressively expand our geographic footprint. During the quarter, we made tremendous progress with 3,264 commercial and residential chargers contracted, sold or deployed, and the number of commercial Blink-owned charging stations contracted or deployed grew more than 46% compared to the same period in 2020. Location is the key for our chargers as more individual drivers and fleets transition to greener transportation, and we prepare the charging infrastructure that will be necessary as utilization increases. We continue to make solid progress during the quarter, securing locations in high density, high volume venues like hotels, multifamily residentials, mixed-use facilities and health care networks. We believe our industry is poised for exponential growth, and we are aggressively scaling our business not just here in the United States but around the world to ensure that we are in the best position to capitalize on the long-term opportunities associated with the global progression to EV use. As the world transitions to driving EVs, Blink can prepare the way by providing our chargers as a key component of what will be a much in-demand infrastructure, the national infrastructure charging stations around the world. With the future in mind, we've enlisted and we'll continue to pursue the best talent available in the EV charging industry to help evaluate our technology and our market presence. During the quarter, we announced the addition of Harjinder Bhade as our new Chief Technology Officer. Mr. Bhade is an industry veteran and an exceptional leader with extensive knowledge of the EV charging space, and he was a founder of ChargePoint. As we continue to expand globally, we're confident that Harjinder's proven track record of success as a software engineer and senior executive will be instrumental to the growth of Blink Charging. We are also welcome -- we are also thrilled to welcome Miko de Haan as the new Managing Director of our European subsidiary, Blink Holdings B.V. As I'll detail in a minute, we believe Europe represents tremendous growth opportunity, so it makes sense for us to enhance our operating presence there. Finally, we recently strengthened our Board with the addition of technology and infrastructure leader, Carmen Perez-Carlton. She brings many years of senior executive experience, including leadership roles in operations, finance and sales and marketing, and we are confident that she is ideally suited to provide advice and guidance as Blink continues to grow and evolve. As Chair of our newly formed environmental, social and governance committee, she'll be forging new and important territory for our company. In perhaps the most notable development of the quarter, we advanced our international strategy with the acquisition of European EV charging operator, Blue Corner. [Technical Difficulty]

We've lost connection with Mr. Farkas. One moment while we reconnect. Thank you for your patience, ladies and gentlemen. We should have Mr. Farkas reconnected in just one moment.

Sorry about that, I got disconnected. As of August 4, 2021, Blue Corner sold or deployed 8,714 independent chargers, comprised of 3,816 Level 2 and 25 DC fast charging publicly accessible chargers and 4,873 private residential chargers located across Belgium, Luxembourg, the Netherlands and France. With this acquisition, as I just mentioned, we established Blink Holdings B.V. to raise our profile in Europe and enhance our ability to bid for and win new contracts in the region. In addition to contributions from existing business, which Michael Rama will review in a few minutes, during the quarter, Blue Corner signed an exclusive contract with KU Leuven to install up to 500 charging stations across Belgium, so we're seeing continued momentum and looking forward to building on that. To give some additional context around the European opportunity, EVs are being adopted at a faster rate than in the U.S., and it follows that their growing market share should translate into higher utilization of charging stations. Historically, Europe has experienced higher fuel prices which makes the transition to EVs more attractive by providing a stronger value proposition for drivers. We expect that the transition rate to EVs will continue to grow and contribute demand for more charging stations across the continent. From an international standpoint, we have also recently signed agreements in Israel and Chile to further accelerate our global expansion. We remain intently focused on our owner-operator model. This is an important direction for our business. We enter into long-term exclusive contracts with automatic extensions that employ a revenue sharing model in which we receive payment each time a vehicle is charged at one of our Blink-owned units. We sell the fuel. With this structure, we have the potential to generate a valuable reoccurring revenue stream for many years to come as EV utilization increases. Our property owner partners also benefit from this model because we take care of the installation and maintenance of Blink-owned units, which is often a very attractive option for property management companies who literally have just so many other responsibilities on their plate. Additionally, our contracts are structured to allow us to add charging stations to these contracted locations any time as necessary as demand increases, and that is throughout the duration of these long-term contracts. It's not about just having a parking space. When we sign a property owner agreement where we provide the services, it's about the entire address, it's about every single type of vehicle that can fuel using electricity. This is a pivotal time to be a leader in the EV charging industry. The shift to EVs is inevitable, and Blink is poised for significant growth as we play a key role providing the infrastructure to support this transition. As we all recently saw, President Biden announced a new executive order setting a target to make 1/2 of all new vehicles sold in 2030 zero-emission vehicles, 1/2. It is important not to lose sight on the fact that we are in a very early stage of this transition, and Blink will continue to invest in our technology, people and operations to solidify our positioning as a best-in-class provider of the charging infrastructure needed to support the transformational shift to EVs. Now I'll turn the call over to Brendan Jones, President of Blink, to discuss some more of our recent developments.

Good afternoon. It is a pleasure to speak with everyone today. We continue to see tremendous interest from the marketplace as demonstrated by the new customers and partnerships we attracted during the quarter. As Michael mentioned, the EV charging industry is still in its relatively early days with tremendous growth potential as EV adoption begins to pick up measurable momentum. The establishment of reliable and accessible EV charging infrastructure goes hand-in-hand with positive leadership trends we are seeing around the development and use of EVs in support of environmental stewardship. And at Blink, we're focused on the long game. We're committed to building operational infrastructure, a class leading sales force, top-notch leadership and support teams to further our leadership role and grow our footprint as a provider of state-of-the-art charging. To give you a reference point around how rapidly we're growing, on June 30, 2020, Blink had 66 employees. We have now more than doubled, almost tripled that to 177 as of June 30, 2021. As we look to strengthen our bandwidth, you can expect to see our head count continue to grow. One of the biggest developments, as Michael referenced from the past quarter has [ been ] the acquisition of Blue Corner and its portfolio of more than 8,700 charging ports. This acquisition provides Blink with a solid foothold to more effectively access the European market, an underpenetrated market that has the potential to be a huge growth driver for Blink as the tradition -- transition to EVs continues to progress. To give you some clarity and context around this, the European EV market is growing faster than the United States. Sales of plug-in electric vehicles in Europe rose to 137% to 1.4 vehicles last year, whereas the U.S. rose 4% to 328,000 according to ev-volumes.com. The surge in EV adoption will increase demand for Blink EV charging infrastructure and European regulations are further accelerating widespread EV adoption via regulatory support for zero-emissions vehicles. Additionally to our expansion into the European EV charging market, domestically, we continue to expand our [indiscernible] as we deploy and upgrade our chargers at locations all over the country. Some notable developments include Blink was awarded $12.5 million grant for the deployment of 50-plus DC fast chargers at 25 locations across the state of Florida. Additionally, the deployment of 10 IQ 200 Level 2 EV charging stations at 3 AtlantiCare integrated health care systems locations in Southern New Jersey; the deployment of 42 charging points at 10 Four Brothers Pizza Inn locations across New York, you can get a slice and get a charge; and we also deployed IQ 200 charging stations at the Native American Youth & Family Center in Portland, Oregon. We upgraded 19 first-generation Blink EV charging stations in Plano, Texas to our IQ 200 fast Level 2 charging stations. We also continue to pursue agreements, partnerships and designations that accelerated our growth strategy. We signed an agreement with General Motors to offer GM EV customers more seamless access to publicly available Blink charging sites across United States as part of GM's Ultium Charge 360. We entered into a reseller agreement with ev Transportation Services to distribute the Blink IQ 200 mobile portable EV charger along with its Firefly ESV. We had some fun in sponsoring the University of Cincinnati Bearcat Electric Vehicle racing team. Now this was the university's first all [ electric ] formula race team, and it's a great idea and a lot of fun for the company. We partnered with Traffic and Parking Control Co., Inc. in Wisconsin, which is a traffic safety and parking solution provider, and they will now [ exhibit ] Blink chargers across their customer base. In the wake of our Blue Corner acquisition, as Michael mentioned, they signed an exclusive contract with KU Leuven for Blue Corner to install up to 500 charging stations across Belgium, and another item, a long-term agreement to deploy Blink EV charging stations to Fattal Hotel Group locations in Israel. For a reference, Fattal is one of Israel's leading hotel companies with luxury hotels in 14 major tourist locations throughout the country. As Michael mentioned, we have made a lot of structural improvements to strengthen the company and capitalize on the interest and opportunities we're seeing in the marketplace. These improvements include expanding and improving our sales team, our service operations team and our product development team. We are very well positioned to support the anticipated growth ahead of us. With that said, our industry now, like many others, is beginning to encounter supply chain challenges related to the global shortage of semiconductors. While our second quarter growth weren't impacted, We will keep you posted on any effects we see as we move through the balance of the year. I will now turn it over to our CFO, Michael Rama, to run through some of the specific results for the quarter. Michael?

Thank you, Brendan, and good afternoon, everyone. 2021 continues to be a strong fiscal year for Blink with total revenue growth of 177% to $4.4 million in the second quarter of 2021 compared to the second quarter of 2020. Revenues for the 6 months ended June 30, 2021, grew 129% to $6.6 million compared to the prior year period. This is noteworthy as revenues for the first 6 months of 2021 has already surpassed total revenues for the entire full year 2020. This growth has driven by increased product sales, increasing charging service revenues as well as increases in network fees. Product revenues increased 156% in the second quarter of 2021 as compared to the same period in 2020 and product revenues for the 6 months ended June 30, 2021, increased 140%. These increases are related to a robust demand for our commercial and residential chargers. Charging service revenues increased 572% as compared to the second quarter of 2020 and 89% in the first 6 months of 2021. The increase was attributable to the increased driving with the reopening of the economy as well as increased number of owned and operated units on our network. Network fees grew 49% as compared to the second quarter of 2020 and 70% in the first 6 months of 2021. The increase was attributed to increases in host-owned units as well as billings and invoicing to property partners during the first 6 months of 2021 compared to the 6 months ended June 30, 2020. Second quarter 2021 net loss was $13.5 million or $0.32 per share compared to a net loss of $3 million or $0.11 per share in the second quarter of 2020. For the second quarter of 2021, net loss was primarily attributable to an increase in compensation expense and G&A expenses. Net loss for the 6 months ended June 30, 2021, increased to $20.8 million from $6 million in the prior year period. Specifically, operating expenses for the second quarter of 2021 increased to $13 million from $3.4 million. Operating expenses for the 6 months ended June 30, 2021, increased to $20.5 million from $6.8 million. This increase was primarily driven by an increase in compensation expense as we invest in our future as well as the additional personnel in conjunction with acquisitions of BlueLA and U-Go made during 2020, which was subsequent to June 30, 2020, and the acquisition of Blue Corner, which occurred in May of 2021. A quick note on expenses in the quarter and first half, as Michael mentioned, we are committed to investing in our future by ensuring that we have the people and operational infrastructure to quickly and efficiently and effectively ramp our business as EV use proliferates and the demand for charging alternatives escalates. As of June 30, 2021, since the inception -- since its inception, excluding Blue Corner, we sold deployed or acquired through acquisitions 18,246 charters, of which 7,360 were on the Blink network. This consists of 4,517 Level 2 publicly accessible commercial chargers, 1,555 Level 2 private commercial chargers, 105 DC fast charging EV publicly accessible chargers, 25 DC fast charging EV private chargers and 1,158 residential L2 -- Level 2 Blink EV chargers, and the remainder were nonnetwork, on other networks or international sales or deployments. These chargers and units are net of swap-outs or replacements that we have done during the years. In addition, as of August 4, 2021, since the inception of our recently acquired Blue Corner, sold or deployed 8,714 independent charge points, which all are on the Blue Corner's network, which comprises of 3,816 Level 2 publicly accessible commercial independent charge points, [ 25 ] DC fast charging publicly accessible commercial independent charge points and 4,873 private L2, private DC and private residential independent charge points. And now a few comments about our cash and liquidity. At June 30, 2021, cash and marketable securities was $195.6 million compared to $22.3 million at December 31, 2020. During the first quarter, if you all recall of 2021, we completed a successful equity raise of $232 million. Now I'll turn it back to Michael Farkas for additional remarks. And after that, we'll open it up to Q&A. Michael?

So 2021 has been a busy year. We are energized and prepared to capitalize on the opportunities we're seeing to grow our role as a key contributor to the establishment and expansion of worldwide EV charging infrastructure. This is an exciting time for our company and our industry, and we look forward to driving continued growth and progress. With that, we will now open up the call for questions.

[Operator Instructions] We'll take our first question from Gabe Daoud with Cowen.

Michael, I was hoping we could just start with the European strategy now with Blue corner officially in the fold. Could you maybe just give us some more thoughts on, I guess, which countries you're targeting specifically? And then I guess, just how you plan on going about the plan there and how you plan on executing the European strategy on the back of Blue Corner.

Very simply, Blue Corner is a company that was very similar to our business, and that's what made them extremely attractive for us. Having the multiple methodologies of deploying, having the hardware and on an operating model, really will allow us to expand the Blink model even more so in the European markets. It's -- there's a -- it's an unbelievable fit between our businesses just from a perspective of business models, hardware, networking and really just an approach to how we work together. It's just an amazing fit with our business. And we're looking to expand not only into the territories that they're currently active in but maybe use them as a stepping stone to get into other areas of the European market. And as Blink, most of you may know, we're in consolidation of about 10, 11 companies now. We look at Blue Corner as being an amazing foundation for us to be able to acquire other businesses in the European space as well.

Got it. That's helpful, Michael. And then I guess as a follow-up, now again with Blue Corner, contribution coming from Europe, which is obviously already a pretty strong market and the U.S. accelerating, how should we think about revenue potential for Blink, I guess, moving throughout the rest of this year and into next year? I know, obviously, there's some supply chain maybe concerns that we have to think about, but could you just help us frame what the revenue potential looks like for next year? Or maybe just give us a sense of like what a port backlog or port inventory near-term number looks like.

Exact numbers, we're not going to disclose here. But bottom line is, as you can see, there's a tremendous amount of money being -- and also now being given by the U.S. government to deploy infrastructure. It's not an issue on the demand side. There's a lot of demand for charging infrastructure now, really in preparation for all the EVs that are starting to hit road. You are correct, there are going to be some problems on the supply side because of some of the chip restraints and so on, and we now are looking at the Delta variation of COVID, which are things that we're still monitoring very carefully, but we're not -- again, we don't have a crystal ball. We can't plan on exactly what's going to happen with these issues, we're trying to do as best as we can. But the industry without a question is growing. The demand for charging infrastructure is off the charts. We believe we've positioned ourselves properly. But as our orders start increasing in size, and you can see that's happening, we may have some pressure on the supply side.

Got it. Got it. And then just maybe sneak in one more. Obviously, you're deploying across multiunit dwellings and health care networks and you have a lot of relationships on the site partner side. Just curious if there's any other relationships you could talk to on the auto OEM side. You mentioned that the GM announcement during the quarter where Blink's network will show up on their app. But curious if there's any way that you could attract or acquire customers at the point of sale of the actual vehicle?

Okay. Well, it's important to understand that today, you can see Blink charging stations at Audi dealerships and you can see them in GM dealerships and you can see them over at CarMax. And those are our IQ 200 model of hardware. You can't get better validation than that. Our hardware is really -- has been developed for where the market is going to be. And if you look at our competitors' hardware and their output, it's really where things were years ago. We've maxed out AC capacity. And we're planning on with the introduction of our next generation of DC doing the same. So yes, it's important to be able to go ahead and have the right hardware and the right offerings to be able to work with some of these OEMs. But right now, again, the validation that we're showing is go to our mobile application and see all the different locations that we're constantly deploying hardware. Look at our numbers. You're talking about north of 3,000 charging stations will be deployed. You're talking over -- on average, over 1,000 a month. And those numbers are going to start increasing. And again, it's broad-based. It's not only multifamilies, it's not only car dealerships, it's not only mixed-use, it's not only health care facilities, it's literally across the board. People are really understanding that our hardware is something that really deals with obsolescence. And any sustainability group from any company that has to look and say, okay, we need to spend x amount of dollars today, they're not going to want to spend that money again in a year or 2 from now when the car is like the Hummers and Audis that are coming out and the Cadillacs that are coming out do have the capacity to match our charging stations, but by far, exceed what our competitors' hardware currently achieves. So if you're not buying our hardware, you're buying obsolescence. And that's the bottom line today. And again, those in the industry, the GMs and the Audis and so on, they're seeing this, and it's being put into their dealerships.

We'll take our next question from Vikram Bagri with Needham & Company.

A couple of quick questions for me. First on EU strategy. Can you talk about how you foresee growth in fleet solutions in Europe? And if you would look to make acquisitions in that category to get a stronger foothold? Also, while we are on the same topic, can you talk about the uptime in your EU assets given that they're recently acquired? And what kind of spending it will require for updating the hardware of the acquired assets and including the uptime if it's lower than your U.S. asset base?

Brendan, is it possible for you to grab this one?

Yes. I mean, I'll speak to the uptime. So if we're talking about the Blue Corner network on itself, we'll continually work to upgrade the system there, but we'll also work, as you might imagine, as you purchase a lot of companies simultaneously, you're going to have behind-the-scenes efforts to commonize platforms and standards so that you can mitigate expense. So we're simultaneously looking at that. We'll have global standards for uptime across the board, both internally and published to our partners. And on the product side, we'll begin to commonize platform over time across both European and the United States with geographic specific products that fit the custom needs of each country or the region that we're in business in. As you might imagine, right now, we're deploying and selling chargers into South America, Dominican Republic, into Greece, into Israel, into Belgium, France and several other countries in the EU. So over time, we'll work to get synergies across those platforms that benefit Blink and bring better value to our customers, whether they're B2B or B2C.

And then if I can squeeze in 1 more. Could you give us a better handle on the expense front? Compensation expense has obviously increased, and you had highlighted how the workforce has increased a lot, and you've seen a larger increase in revenue, so it's understandable. But -- are we -- can you just like give us an indication of what the trajectory of compensation expense is going to be rest of the year? If second quarter run rate is a run rate that we should assume going forward? And what kind of increase we should expect in the rest of the year?

Yes, I'll jump on that. And obviously, we're -- we've had an uptick in compensation. Obviously, we added Blue corner, BlueLA and U-Go in the mix compared to previous quarters. We've increased our staff, our employees from 66 to over 170 in a year. So we're investing in the future, and we're bringing bodies in now. We're bringing the top talent in now. On a run rate for the rest of the year, I hope to bring in more quality talented people to grow the company. It's a good thing. So to say it's going to stay static, we'll see some uptick in those areas. And then obviously, if we do other acquisitions or other expansion that, that would add as well to that.

Yes, I'll only add -- when we look at talent that it's one of the key components to the success of the company, both from a leadership and ingenuity and vision perspective. So we filled a lot of key holes in the company over the last quarter and over the last 6 months to a year. But as we need more bandwidth, we'll continue to add headcount at the lower levels, have 1 or 2 high-level strategic positions that has to be filled, but it's really growing that base of people that move the company on a daily basis that we'll need to focus on over term -- over time and hiring those people. And as you may know, if the company is performing well, as Blink has over the last year, you begin to attract and more talented people come to you as opposed to you recruiting them, and we've seen that phenomenon take place here at Blink.

[Operator Instructions] We'll take our next question from Sameer Joshi with H.C. Wainright.

Just wanted a clarification on the revenues from Blue Corner. Have they been included pro forma for the entire quarter? Or only starting from May 10 when the transaction closed?

Yes. They're included from May 10 when the transaction closed. You'll see when we file our 10-Q on a pro forma, what it looks like for -- what 2020 will look like as well as partial 2021 with Blue Corner included in our results, but for the actuals, it's from the acquisition date forward.

So the charging revenues are likely to be -- if everything else remains same, charging revenues are likely to be slightly higher in the third quarter? Is that [ the way to think about it ]?